Transcript

00:00:01

>> The DOW and the S&P 500 joined the Nasdaq Wednesday in returning to positive territory for the year, as the stock market takes another step farther from the turmoil of last week. It was a rocky session though, with investors forced to digest a hotter than expected reading on inflation, a word that recently started striking fear just at the mention of it.

00:00:21

A monthly report measuring consumer prices initially scared the pants off investors. But by the end of the session, the DOW rallied to close up 253 points. After almost ten years of not having to worry about inflation, investors were recently jolted into considering what the return of it means.

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But some investors are now becoming more reflective, says Reuters Wall Street markets correspondent, Chuck Mikolajczak.>> Most people realize that the inflation really isn't at a level yet that should be concerning to investors. It's not like we're gonna suddenly be in this runaway inflation environment. Right now we're still at levels, the economy is still growing or on solid footing at the very least, it's not going in the other direction.

00:01:06

If it does get to the point where it starts to run away, then the Feds are gonna have to be more aggressive, which is what the market doesn't have priced in yet. Feds saying three hikes, they did three hikes last year. Most people were on the fences, two, three, now we're starting to see some come in, okay, there's a good chance they're gonna do four this year.

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>> Some of those fears about hotter inflation and the more aggressive Fed are being fuelled right out of Washington. The Trump tax cuts have the potential to add more juice to an economy that's already at full employment, which could lead employers to pay workers more to hold onto talent.

00:01:39

And then pass higher labor costs onto customers, reinforcing a cycle of rising inflation. And it's the threat of quickly shifting from low inflation to way hot inflation that investors are now, vigilantly looking out for.